Is it financially sound to assume an A4 lease (Swapalease) with intent to purchase vehicle?

seif

I am considering taking up someone's A4 lease through Swapalease. The vehicle is 2016 Quattro Premium 4dr. It has 15K miles on it with 16 months and 10,300 miles remaining. The lease buyout cost is $31,000 now or $24,000 at the end of the lease. It includes maintenance program for length of lease.

I am trying to get a sense of wether or not picking up the lease, then buying at end, makes sense. My thinking is, I can get a low payment for the next 1.33 years, pay down the cost of the vehicle a bit more and then buy it when lease is up. Instead of just buying a used car upfront, this would prevent me from having to put down a hefty down-payment and higher monthly payments. Is there something I am missing here? Any insights or perspectives are appreciated.

Car Equipment

Alloy Wheels
Bluetooth
Heated Seats (Front)
iPod/MP3 Bluetooth Connectivity
LED Headlights
LED Running Lights
Metallic Interior Trim
Navigation System
Sport Package
Sun or Moon Roof
USB Port
ABS (Anti-Lock Braking System)
Air Bags (side impact)
Air Bags(Front)
Air Conditioning
Alarm/Security System (anti-theft)
Climate Control
Compact Disc (Single)
Cruise Control – Standard
Fog Lights
Fold Away Sideview Mirrors
iPod/MP3 Auxiliary Input
Keyless Entry System
Memory Seats
Multi-Zone Climate Control
Power Driver's Seat
Power Locks
Power Passenger's Seat
Power Steering
Power Windows
Premium or Custom Wheels
Premium Sound
Push Button Start
Rain Sensing Wipers
Rear Air
Satellite Radio
Split Folding Rear Seats
Stability Control
Steering Wheel Controls
Telescoping Wheel
Tilt Wheel
Tire pressure monitoring
Traction Control
Wi-Fi Connectivity
Wireless Mobile Phone Charging

kyfdx

seif said:

I am considering taking up someone's A4 lease through Swapalease. The vehicle is 2016 Quattro Premium 4dr. It has 15K miles on it with 16 months and 10,300 miles remaining. The lease buyout cost is $31,000 now or $24,000 at the end of the lease. It includes maintenance program for length of lease.

I am trying to get a sense of wether or not picking up the lease, then buying at end, makes sense. My thinking is, I can get a low payment for the next 1.33 years, pay down the cost of the vehicle a bit more and then buy it when lease is up. Instead of just buying a used car upfront, this would prevent me from having to put down a hefty down-payment and higher monthly payments. Is there something I am missing here? Any insights or perspectives are appreciated.

Car Equipment

Alloy Wheels
Bluetooth
Heated Seats (Front)
iPod/MP3 Bluetooth Connectivity
LED Headlights
LED Running Lights
Metallic Interior Trim
Navigation System
Sport Package
Sun or Moon Roof
USB Port
ABS (Anti-Lock Braking System)
Air Bags (side impact)
Air Bags(Front)
Air Conditioning
Alarm/Security System (anti-theft)
Climate Control
Compact Disc (Single)
Cruise Control – Standard
Fog Lights
Fold Away Sideview Mirrors
iPod/MP3 Auxiliary Input
Keyless Entry System
Memory Seats
Multi-Zone Climate Control
Power Driver's Seat
Power Locks
Power Passenger's Seat
Power Steering
Power Windows
Premium or Custom Wheels
Premium Sound
Push Button Start
Rain Sensing Wipers
Rear Air
Satellite Radio
Split Folding Rear Seats
Stability Control
Steering Wheel Controls
Telescoping Wheel
Tilt Wheel
Tire pressure monitoring
Traction Control
Wi-Fi Connectivity
Wireless Mobile Phone Charging

How long do you plan to take to pay for it?
16 months of lease payments, then 60 months of finance payments?

That's a pretty long term for a used car.

seif

Not 60 months. I would likely drop a chunk into it after the lease is up...with about $24K left, I would put down $10K and then payoff the rest over time.

kyfdx

seif said:

Not 60 months. I would likely drop a chunk into it after the lease is up...with about $24K left, I would put down $10K and then payoff the rest over time.

Better off just buying it out now, then, if you have $10K to put down.

seif

Can you elaborate on why it would be better to buy outright now? And what you see the potential savings to be in that scenario?

I should mention that the current lease payment is $340/month (feathers $2K incentive from owner) and is now at 15 months (will edit question). That is $5,100 in remaining lease payments and then $24K at buyout...then my $10K + $14K loan that comes to approx. $15K after interest.

5100 (lease)
10000 (down after 15 months)
15000 (loan at 3%)
= $30,100
...and in this scenario I get to hold onto my $10K for another 15 months.

Perhaps I am not looking at something correctly...why would it be better off to just buy now?
Thanks for the input.

kyfdx

seif said:

Can you elaborate on why it would be better to buy outright now? And what you see the potential savings to be in that scenario?

I should mention that the current lease payment is $340/month (feathers $2K incentive from owner) and is now at 15 months (will edit question). That is $5,100 in remaining lease payments and then $24K at buyout...then my $10K + $14K loan that comes to approx. $15K after interest.

5100 (lease)
10000 (down after 15 months)
15000 (loan at 3%)
= $30,100
...and in this scenario I get to hold onto my $10K for another 15 months.

Perhaps I am not looking at something correctly...why would it be better off to just buy now?
Thanks for the input.

If the mileage allowance is enough for you, it's probably better to just lease the car for 15 months, then turn it in.
If it's really $340/mo.

seif

Yes, it is $340/month with the seller incentive. The mileage becomes a non-factor if I intend to buy at end of lease. I would rather own, ultimately, so turning in and starting over again is not optimal. The factors (low mileage, great condition, $2K incentive, low monthly for 15 months) in this particular scenario are what make it - as I see it - attractive to take over then buy. I am looking for someone to tell me why (financially, practically, etc) I am totally wrong.

Michaell

seif said:

Yes, it is $340/month with the seller incentive. The mileage becomes a non-factor if I intend to buy at end of lease. I would rather own, ultimately, so turning in and starting over again is not optimal. The factors (low mileage, great condition, $2K incentive, low monthly for 15 months) in this particular scenario are what make it - as I see it - attractive to take over then buy. I am looking for someone to tell me why (financially, practically, etc) I am totally wrong.

I picked a random NJ zip code and searched for 2016 A4's.

Fewer miles and a lot less than the $30K you're calculating

Use your $10K as a down payment on that and buy the car from the get-go.

ken117

The first step is to decide if $31K is comparable to the price used comparable A4s are selling for in your area. Chances are the $31K is high.

If the $31K is a fair price, you need to determine how much you will pay if you assume the lease and buy the vehicle out at the end of the lease and compare it to how much you will pay if you buy it now, including interest.
Chances are assuming the lease will be more expensive.

If you are assuming a lease, you are doing someone a favor, check if that person is willing to make a few of the remaining lease payments to get out of the lease.

Personally, I would never assume anyone's lease. You do not know how clever that person was in negotiating the lease. For example, did the person pay MSRP or did they negotiate the price. What did the person include in the lease as capitalized cost (did they include sales tax, acquisition fee, loss on trade, etc). The lease payment you assume may well be inflated for these types of things.

In summary, better to buy know if you want the A4.

seif

I appreciate the answer @ken117. The seller has already given $2000 towards payments. That is why the lease payment is so low.

@Michaell I appreciate the post and the link...but the car you linked to is not apple-to-apples. The one linked is Front Wheel Drive, while I am looking for Quattro

Michaell

seif said:

I appreciate the answer @ken117. The seller has already given $2000 towards payments. That is why the lease payment is so low.

@Michaell I appreciate the post and the link...but the car you linked to is not apple-to-apples. The one linked is Front Wheel Drive, while I am looking for Quattro

Fair enough ... but, my point is, you could simply find a similar car that you could buy outright, and skip the hassle of the lease transfer, then buying it after lease end. Seems like a complicated solution to a fairly easy problem.

Mr_Shiftright

Also the mileage limits are very tight. Are you really going to be able to keep it at 650 miles a month? What is your per mile overage in the contract? If you are like most Americans, you're going to be 5K over on miles, or maybe 6,500, and that's going to be a bill for an additional $975. That would add $60 a month to your payments, in effect.

seif

@Mr_Shiftright My plan would be to buy the car upon the end of the lease, so miles wouldn't be a concern.

Mr_Shiftright

Yes I understand, but what if you change your mind, or the car proves troublesome, for instance? Perhaps as you get closer to buy out you can up your use.